DEVOTED TO DAIRY
“We are the only farmer-owned dairy company in SA which means that we are very close to our main supplier source. As a low-margin business, it’s important that we’re aligned with our farmers,” begins DGSA CEO, Drikus Lubbe.
“We speak from one mouth, which allows us to think ahead and means we’re not overly profit-driven in the short term, although that’s important for DGSA going forwards. They also have a long-term view on milk supply and where we want to take the business.”
DGSA’s shareholding members are part of an esteemed national milk buyer network that extends to nearly every province in SA.
The company is proud of the solid relationship it has nurtured with members, extending back over several generations, and has devotedly succeeded in providing a home for milk, ensuring first-class dairy products are delivered to millions of South Africans every day.
“Farmers are our number one partner, not only as shareholders but in understanding the long-term game that we play. I have regular meetings with them, and we have committees and teams that look after them,” shares Lubbe.
“Both sides – the farmers and the business – must understand how we can help each other. The agricultural sector is not an easy one, and without the farmers, the business wouldn’t exist, so we work closely together.”
DGSA PRODUCER BENEFITS
Milk procurement – DGSA purchases milk regionally based on volume, locality, composition, and quality.
Protection – The interests of DGSA producers are protected by delivery agreements and/or supply contracts.
Reliability – Milk is collected timeously and sampled by reliable, well-trained truck drivers as well as being independently analysed by externally accredited labs.
Transparency – DGSA has a fair and transparent milk payment system, and nearly all factors affecting the price can be managed and influenced by the producer.
Feedback – Producers receive frequent feedback on milk volumes collected, as well as the latest sample analysis regarding milk composition and quality.
Support – Encouraging sustainable development for its producing members, DGSA applies its expertise in the establishment of internationally recognised best practices on their farms.
Communication – DGSA has the infrastructure in place to ensure frequent communication between all stakeholders. Producers are well represented on the group’s board to guarantee their voices are heard and interests protected.
Complaints – All complaints are addressed promptly and effectively. DGSA’s emphasis is on professional feedback and continuous improvement.
JOINING FORCES
DGSA was founded in October 2020 as a merger between Dairy Farmers of South Africa (DFSA) and Coega Dairy.
The former became fully operational in 2017 as a subsidiary of Clover, who Lubbe started working for in 1993 (then known as National Cooperative Dairies) and where he became one of the company’s youngest board members at the time in 2006 in the role of Executive Supply Chain Director, tasked with looking after the entire supply chain from farm to customer.
“In 2019, DFSA was battling to survive. I was asked to join DFSA as the new CEO and saw that the business model wasn’t working, merged it with Coega Dairy, and renamed it DGSA – the rest is history,” he recalls.
Following the merger, DGSA has been operating for over two-and-a-half years and is now in the process of further mergers and acquisitions.
“Because we need to be low cost and have scale, we are busy talking to a number of other companies that want to join forces with us to create a better dairy platform, which will have a big impact on our business.”
Operating in the Eastern Cape province of SA, DGSA has a UHT milk and butter factory that supplies Shoprite, Africa’s largest grocery retailer, as well as a plant that produces cheeses for Famous Brands, the continent’s leading branded food services franchisor.
“We supply all the cheeses for Famous Brands’ pizza and burger franchises,” Lubbe informs us.
DGSA VALUES – AT A GLANCE
Teamwork – DGSA’s flexible, ever-changing teams consistently speak up, experiment, reflect, listen intently, and integrate different facts and points of view to create new possibilities.
Integrity – DGSA is honest, does at it says, and consistently does what is right.
Trustworthiness – By accurately reporting current and past facts, being reliable, and fulfilling what it consents to do even if it means unexpected sacrifice, DGSA earns future trust.
Drive – Accomplishing the right goals at the right time, regardless of the circumstances.
Commitment – DGSA invests time and energy to complete each task it is assigned.
Resilience – Springing back into shape and recovering quickly from difficulties.
ALIGNED PARTNERS
As with its farmers, DGSA hunts for partners such as Shoprite and Famous Brands that are aligned with the company and its value chain.
After all, dairy is one of the most seasonal businesses in SA, with most of DGSA’s work taking place in the summer months, something that needs to be understood by partners.
“For us, it’s very important that we work on integrity, commitment, and see through the whole value chain,” outlines Lubbe.
“No man is an island, and because we are a low-margin business, there’s no place for inefficiencies or extra costs. There needs to be solid relationships and an understanding from farm to store of everyone working together.”
With a large footprint of farms across the Eastern Cape, one of the poorer provinces in SA, it is likewise important to give back to the people and communities that support the business.
From Lubbe’s perspective, it’s equally vital that DGSA’s supply chain partners, from farmers to retailers, understand that the company recognises their importance and depends on them.
All hands are currently on deck to ensure DGSA gets through the current season, as dairy producers in SA continue to deal with load shedding. Daily power cuts and scheduled blackouts have had a major impact, for example, on the processing and storage of milk.
“The world is aware of our load shedding issues, our road and rail infrastructure is falling to pieces, and security has always been a problem in SA, so basic services in the country are under threat,” Lubbe says.
“But it also creates opportunities for businesses that can think outside the box and exploit the issues and challenges we have, so we spend a lot of time thinking about how we can improve the power situation and get around road, rail, and security issues.”
Having supplied Shoprite short this year due to low milk flow in SA, farmers are being asked by DGSA to increase the collection of milk in the coming months.
“All the machines must be up and running, and our cash flow is ready to handle all the stock build-up to make sure that we can supply our retail partners with the necessary product for the whole of next year – that’s our main focus,” assures Lubbe.
LACTOSE FREE
As a 100 percent dairy company owned by farmers, DGSA’s technical capabilities are built upon the likes of UHT milk, butter, and cheese.
Expanding into different commodities and product ranges, DGSA recently launched the Creamline brand, whose UHT milk and dairy blend products are lactose free for improved digestive wellness.
“Some of the technologies we’ve applied in the Creamline products are different in terms of how we want to play in the lactose-free space,” Lubbe outlines.
“Most Africans are lactose intolerant, but in SA, lactose-free products are sold at a premium. We want to sell Creamline at just above the normal price, utilising our low-cost infrastructure. We just launched it at the end of last year, so we’ve been busy with that and it’s still early days.”
DGSA is passionate about growing the strength of the local dairy industry and the first-class products it sends across the continent.
By growing a culture of shared interests and opportunities within the local dairy industry, DGSA offers consumers a wide range of nutritional products at competitive prices.
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